Mexico lawmakers flag $30 billion Pemex loss in audit

Mica Rosenberg

4 IN. DI LETTURA

MEXICO CITY (Reuters) - Mexican lawmakers are calling for an official probe into how state oil monopoly Pemex accounted for a suspected $30 billion loss in 2009 which an audit showed the company later booked as assets.

Esthela Damian, an opposition congresswoman who heads the accounting oversight committee, said she is asking federal authorities to investigate irregularities in Pemex’s accounts.

A Pemex spokesman said the accounting issue had nothing to do with fraud and was linked to a change in the financing regime to fund long-term infrastructure projects known as Pidiregas. He said the company would make a more complete statement later.

An overhaul of the state oil monopoly to introduce more efficiency and transparency is a top issue in the July 1 presidential election, since Mexico relies on oil revenues to fund around a third of the federal budget.

Damian, of the leftist Party of the Democratic Revolution, or PRD, said Pemex appeared to have scrubbed a 2009 loss of 398.6 billion pesos ($30.27 billion) from its books, and that this was later recorded as an increase in assets. Pemex’s board of directors did not authorize the move and the company gave no technical basis for its accounting, Damian said.

“This accounting move is truly scandalous. It cannot be counted as an asset when we have discovered through an audit that it is in fact a loss,” Damian told Reuters in an interview.

A congressional audit of 2010 federal government finances, published in February of this year, found Pemex’s exploration and production arm “did not comply with the proper regulatory requirements” in explaining the 2009 loss.

The audit said Pemex had registered the loss as an increase in “investments in subsidiaries.”

The company is not publicly traded and regularly operates at a loss because most of its revenue is gobbled up in taxes.

But the 400 billion-peso figure would be close to double the company’s annual losses from 2009, 2010 and 2011 of 232.4 billion pesos combined, according to Pemex filings with the Mexican stock exchange.

PRD lawmakers are requesting a hearing with Pemex Chief Executive Juan Jose Suarez Coppel and a formal investigation by the federal comptroller’s office.

The comptroller’s office did not immediately comment on the report.

How to improve management of Pemex’s hulking bureaucracy is high on the agenda in the election race, where the centrist Institutional Revolutionary Party, or PRI, has a wide poll lead over the ruling conservatives, the National Action Party (PAN).

Both the PRI and the PAN are proposing major changes to the state-run giant to improve oil output and turn it toward long-term profitability. The PRD, by contrast, is opposed to significant outside investment in the company.

U.S.-based energy analyst George Baker said the timing of the announcement by the leftist party could be political.

“Whether it’s true or not, it has a resonance because of the electoral cycle,” said Baker.

A plan to open up Pemex further to the private sector would help boost the Mexican economy, adding as much as 0.8 percentage point to annual gross domestic product over a five-year period, said consultancy Capital Economics in a report.

($1 = 13.1680 Mexican pesos)

Additional reporting by Miguel Angel Gutierrez, Ana Isabel Martinez and David Alire Garcia; Editing by David Gregorio and Matthew Lewis